Roby v. Corporation of Lloyd’s of London

The Corporation of Lloyd’s of London (Lloyd’s) (defendant) was a market for the purchase and sale of insurance risks. Lloyd’s was composed of brokers, active underwriters, members’ agents, managing agents, and Names. Names were high-net-worth individuals who served as the ultimate underwriters of the insurance provided through Lloyd’s. Names were passive participants in Lloyd’s: they did not actively engage in underwriting and had no management roles or authority. Through their members’ agents, Names joined syndicates, which took on percentages of the risks on specified insurance policies in exchange for percentages of the corresponding policy premiums. Generally, no single syndicate assumed the full risk for any policy; rather, multiple syndicates shared a policy’s total risk. Upon joining Lloyd’s, Names signed contracts that provided, among other things, that (1) the Names were not entering into partnerships with any members’ agents or managing agents or with any fellow syndicate members and (2) English law governed the Names’ relationships with Lloyd’s. More than 21,000 of the Names were English citizens. John Roby and 90 other Names (investors) (plaintiffs) sued Lloyd’s and the approximately 300 syndicates to which the investors belonged (collectively, syndicate defendants) (defendants). The investors alleged that the syndicate defendants violated the federal securities laws and the Racketeer Influenced and Corrupt Organizations Act in connection with their solicitation of investors in the United States. The syndicate defendants moved to dismiss the complaint, arguing that they were not legal entities that were capable of being sued under either English or New York law. The investors did not dispute the syndicate defendants’ reading of English or New York law, but they contended that the federal securities laws and Federal Rule of Civil Procedure 17(b) governed and that the syndicate defendants were legal entities under those latter provisions.